What can I claim as a business expense in 2025?

Tax efficiency comes down to operating intelligently within the defined rules of a certain country. A smart tax strategy can make a big different in saving your company money, and part of that is knowing what you can claim as a business expense in order to reduce taxable income while still complying  with HMRC (His Majesty’s Revenue and Customs) regulations. 

Given the updates to evidence requirements and flat-rate claims, a real grasp on what constitutes allowable business expenses is especially critical in 2025. 

If you’re asking yourself what you can claim as a business expense in 2025 — You’re in the right place. Let’s explore the full picture to help you maximise your deductions and maintain compliance.

Revenue expenses vs. capital expenses in expense claims

When claiming expenses, distinguishing between revenue and capital expenses is crucial for accurate reporting and compliance with HMRC rules:

Revenue expenses are costs incurred for the day-to-day operation of a business, such as rent, utilities, and office supplies. These expenses are typically deducted in full during the tax year they are incurred, as they directly contribute to generating income.

In contrast, capital expenses involve the purchase or improvement of assets that provide long-term benefits, such as machinery, vehicles, or office renovations. These costs are not fully deductible in the year of purchase but can be claimed gradually through capital allowances or depreciation, depending on the type of asset and accounting method used. 

For example, buying a new office printer would be treated as a capital expense, while replacing its toner cartridges is a revenue expense.

What qualifies as a business expense?

A business expense is any cost incurred wholly and exclusively for the purposes of running your business. HMRC scrutinises claims closely, so it’s important to keep detailed records and receipts.

For example, if you buy a laptop costing £1,200 for business use but occasionally use it to stream Netflix, only the business-use portion — say 80%, or £960 — can be claimed as an allowable expense.

Knowing the difference between allowable and disallowable expenses is the first step to staying compliant.

What can I claim as a business expense?

1. Office costs and supplies

Whether you’re running a startup or a multi-employee business, office-related expenses are common. Here’s what’s typically allowable:

• Stationery and printing: Pens, notebooks, and printer ink.
• Office furniture: Desks, chairs, and filing cabinets count if used exclusively for business.
• Tech equipment: Computers, printers, and software subscriptions (e.g., Microsoft Office).

Home office costs

If you work from home, you can claim a portion of your home utility bills (e.g., electricity, water, and heating). Alternatively, HMRC allows a simplified flat-rate claim of £6 per week.

2. Business travel and vehicle expenses

For many companies, business travel can foster collaboration between employees, offer opportunities for professional growth, expand networks, unlock access to untapped markets, and ultimately drive revenue.

Travel for business

Travel costs incurred for business purposes — like attending client meetings, conferences, or networking events — are deductible. 

Examples include:

• Train, bus, or plane fares.
• Taxi and parking fees.
• Hotel accommodation during business trips.

Vehicle costs

If you use a car for business purposes, there are two methods to claim expenses:

• Mileage rate method: Claim 45p per mile for the first 10,000 miles, then 25p per mile.
• Actual cost method: Deduct costs for fuel, insurance, repairs, and road tax, but only the business-use portion.

3. Marketing, advertising, and professional fees

Promoting your business is essential, and the costs associated with doing so are fully deductible.

Marketing and advertising

From Google Ads to creating a new company logo, these expenses are allowable if they’re for business promotion.

Professional fees

The cost of hiring accountants, solicitors, or consultants for business-related advice is deductible. For example, fees for filing tax returns or drafting contracts count as allowable.

Membership subscriptions

Membership fees for professional bodies, such as trade or professional journals or organisation memberships, are allowable if directly relevant to your business.

4. Employee-related costs

Employers can claim a variety of expenses related to employees, provided they’re necessary for the business.

• Salaries and wages: Fully deductible, including bonuses.
• Training: Relevant training courses that improve employee skills count, but unrelated courses don’t.
• Uniforms and protective clothing: Safety helmets, branded uniforms, or high-visibility jackets are allowable. 

5. Financial and legal expenses

Every business, no matter how big or small, has expenses related to financial and legal services. When these expenses are proven to be crucial to the company’s operations, they can be claimed for tax relief. 

Bank charges and loan interest

Costs related to business bank accounts and loans are deductible. For example, if you pay £300 annually for a business account and £2,000 in interest on a business loan, these amounts can be claimed.

Insurance

Policies such as public liability, professional indemnity, or business interruption insurance qualify as allowable expenses.

Legal fees

Fees for drafting contracts, handling disputes, or other business-related legal services are deductible. Costs for acquiring capital assets (e.g., property) aren’t, but they can be added to the asset’s cost for capital allowances.

What’s disallowed as a business expense?

While HMRC is accommodating, there are some hard rules on what doesn’t count:

• Client entertainment: Business meals or gifts for clients.
• Fines or penalties: Parking fines or HMRC penalties.
• Commuting costs: Travel between your home and regular workplace.
• Everyday clothing: Regular suits or shoes worn to work.

Key changes in 2025

As of late 2024, HMRC introduced stricter evidence requirements to improve compliance and reduce ineligible claims.

New documentation rules

You’ll need:

• Receipts for travel, accommodation, and meal claims.
• Detailed mileage logs (start and end locations, reasons for the journey).

Flat-rate claims (e.g., uniforms or home office costs) remain exempt from evidence requirements.

How to maximise tax efficiency

Maximising your tax efficiency will help you manage your claims more efficiently while assisting with compliance with the HMRC guidelines.

1. Stay organised

• Keep receipts and records for all expenses, even if they seem small.
• Use expense management tools like Navan to automate tracking and categorisation to save time and money.

2. Consult the experts

Professional accountants can guide you on how to submit your claims to meet HMRC requirements and help identify less apparent deductions.

3. Educate employees

If your team submits expense claims, make sure they know what’s allowable and what documentation is needed.

Why it matters

Accurately claiming business expenses doesn’t just reduce tax liability — it also protects you from HMRC audits, which, in case of non-compliance, may lead to substantial penalties.

With Navan’s travel and expense all-in-one solution, no expense will be left unrecorded. By simplifying the expense tracking and recording process, the platform can help you focus more on submitting your claims instead of investing extra time and effort in finding and organising the needed documentation for proof. 

Looking to simplify your business expense claims in 2025? Learn how Navan can assist you by booking a demo today.